In a surprise move, Carolinas HealthCare System announced Tuesday it will eliminate the position of president and chief operating officer – second-in-command to CEO Michael Tarwater.
As a result, Joe Piemont, 60, the system’s president and COO since 2007, will leave at the end of May, according to a statement.
Officials of the $8 billion public nonprofit hospital system announced the elimination of Piemont’s position about two hours after a special board meeting Tuesday morning.
There was no public discussion during the meeting. The board voted immediately to go into a private, executive session. After about 80 minutes, the board returned to open session and adjourned.
Piemont, who has been with the hospital system for 18 years, received total compensation of $3.5 million in 2014. Ironically, he is one of the executives who helped implement last fall’s decision to eliminate more than 100 management positions as part of a goal to trim $110 million in expenses from the 2015 budget. With 30,000 employees locally, Carolinas HealthCare is the Charlotte area’s largest employer.
In an email to employees Tuesday, Tarwater said his decision to eliminate Piemont’s job is a continuation of last fall’s executive reorganization “to support our expense reduction efforts and to create more efficiency.” He said it allows the system “to become more nimble and …better respond to the challenges and opportunities in front of us.”
Piemont released this statement: “My time here has been nothing short of amazing. While I am deeply saddened, I respect and support this organization and look forward to seeing its continued success. I am tremendously proud of the work we have done together to establish Carolinas HealthCare System as the provider of choice for so many people, and I’ve had a front row seat watching miracles being performed by extraordinary people for the past eighteen years.”
Hospital systems across the country are restructuring to achieve efficiencies and reflect changes in health-care delivery, said Dennis Kain, president of Tyler and Co., a health care executive search firm based in Atlanta.
That doesn’t necessarily mean eliminating chief operating officers at every hospital because the roles of those executives vary from place to place, Kain said. Instead, he said, hospitals are reorganizing based on specialty areas such as cancer care, cardiology and orthopedics, instead of a traditional administrative hierarchy.
At Carolinas HealthCare, the reorganization Tarwater announced last fall shifted some responsibilities away from Piemont, in a move that might have foreshadowed what was to come.
For example, Dr. Roger Ray was promoted from chief medical officer to chief physician executive, taking on duties that had previously been performed by others. And instead of reporting to Piemont, Ray began reporting directly to Tarwater – a major change for all three executives.
In the past three years, Carolinas HealthCare has also eliminated two executive vice president positions and redistributed their duties to others, including Ray. That saved about $3 million in annual total compensation.
In response to Observer questions, hospital spokeswoman Amy Murphy said Tarwater made the decision to eliminate Piemont’s job and met with the board to “seek their input.” She said Piemont’s job performance was not at issue.
“Joe and I have discussed this difficult decision, and he understands and respects our reasons for it,” Tarwater wrote to employees. “… I am very grateful for Joe’s many contributions. … His passion for providing access to high quality healthcare will continue to be felt by the millions of patients who choose Carolinas HealthCare System.”
In an email to the Observer, Tarwater wrote: “…While this decision is painful at a personal level, as he is a friend, I am confident that our organization is on the right course.”
From 2002 to 2007, Carolinas HealthCare did not have anyone serving in the COO position, Murphy said. Piemont joined the system in 1997 and held multiple senior-level positions before becoming president and COO in 2007.
With Piemont’s departure, Tarwater will now have five more executives reporting to him directly, in addition to Ray and three others who already do. The five are: Paul Franz, executive vice president-regional group; John Knox, chief administrative officer; Debra Plousha Moore, chief human resources officer; Dennis Phillips, executive vice president-metro group, and Keith Smith, general counsel.